Mortgage Protection Life Assurance
A mortgage is undoubtedly the largest amount of debt that the majority of us get into during the course of our lives. As a couple, more money is available for a house purchase if we are to take out a joint mortgage on a property, but what does this mean for the surviving partner if one of the joint owners dies?
What is Mortgage Protection Assurance/Insurance?
Mortgage life assurance, also known as mortgage protection, is an insurance policy that is designed to pay off your repayment mortgage if you die before it is cleared. Having a policy like this in place is crucial for any homeowner who doesn’t want to lump their partner with unaffordable mortgage payments in the event of their death. It can provide peace of mind for you, and a welcome cushion for your dependents if you were to pass away.
Do not confuse mortgage protection insurance with mortgage payment protection insurance (MPPI) policies, which are completely different. MPPI is put in place to pay your monthly mortgage for a while if you are too ill to work or become unemployed. Mortgage protection is in place to take care of your whole mortgage debt if you die.
How does it work?
Just like any other form of life insurance, your mortgage protection insurance is designed to pay out in the event of your death. Mortgage protection insurance will usually run alongside your mortgage, so if you have a 25 year mortgage, your insurance agreement will run for at least this length of time. It is designed to pay off your mortgage if you pass away, but as it is paid directly to your beneficiaries rather than to the bank, it is up to them whether they use all, part or none of it to pay the mortgage off.
Decreasing Cover.
Decreasing term is a cheaper way to get cover for your repayment mortgage if you are not worried about covering for other expenses. A decreasing term policy is mapped out to track the amount you owe on your home, and pays out less and less as time goes on, as you owe less on your mortgage. This means your dependents are left with enough money to pay off the mortgage, but not much else.
Joint or single life?
For pure mortgage protection decreasing term insurance we recommend all parties to the mortgage are insured on the policy.
Terminal Illness
Any mortgage protection policy can have terminal illness included as an option. This will cover you if you are diagnosed with one of the stated illnesses and are predicted to die within 12 months. Having access to the insurance money early can help with things like covering loss of earnings, going on a big family holiday together or even to pay for a carer to help you at home.
Critical Illness
You can also opt to include critical illness in your mortgage protection insurance, which will pay you and your family a lump sum if you suffer a life changing critical illness. Depending on the policy, this can include things like cancer, strokes, deafness and MS, which will all have an impact on your ability to work and look after yourself in the future.
Things to consider:
This is not a savings policy & If you cancel your policy there is no cash-in value.
Cover will end if you don’t make monthly payments.
If your mortgage interest rate ever goes over the relevant stated interest rate provided for in your product’s key facts document, it will not always guarantee to repay the outstanding amount.
You would not have this type of policy for a pure interest only mortgage as the mortgage debt may not decrease at all. A level life insurance policy would be better. Further, you may wish to provide for your dependents and loved ones over and above the mortgage debt being repaid. In this case you could opt for alternatives. It is best to contact us to discuss and we will help you decide and provide the quotations for your consideration.
What is Mortgage Protection Assurance/Insurance?
Mortgage life assurance, also known as mortgage protection, is an insurance policy that is designed to pay off your repayment mortgage if you die before it is cleared. Having a policy like this in place is crucial for any homeowner who doesn’t want to lump their partner with unaffordable mortgage payments in the event of their death. It can provide peace of mind for you, and a welcome cushion for your dependents if you were to pass away.
Do not confuse mortgage protection insurance with mortgage payment protection insurance (MPPI) policies, which are completely different. MPPI is put in place to pay your monthly mortgage for a while if you are too ill to work or become unemployed. Mortgage protection is in place to take care of your whole mortgage debt if you die.
How does it work?
Just like any other form of life insurance, your mortgage protection insurance is designed to pay out in the event of your death. Mortgage protection insurance will usually run alongside your mortgage, so if you have a 25 year mortgage, your insurance agreement will run for at least this length of time. It is designed to pay off your mortgage if you pass away, but as it is paid directly to your beneficiaries rather than to the bank, it is up to them whether they use all, part or none of it to pay the mortgage off.
Decreasing Cover.
Decreasing term is a cheaper way to get cover for your repayment mortgage if you are not worried about covering for other expenses. A decreasing term policy is mapped out to track the amount you owe on your home, and pays out less and less as time goes on, as you owe less on your mortgage. This means your dependents are left with enough money to pay off the mortgage, but not much else.
Joint or single life?
For pure mortgage protection decreasing term insurance we recommend all parties to the mortgage are insured on the policy.
Terminal Illness
Any mortgage protection policy can have terminal illness included as an option. This will cover you if you are diagnosed with one of the stated illnesses and are predicted to die within 12 months. Having access to the insurance money early can help with things like covering loss of earnings, going on a big family holiday together or even to pay for a carer to help you at home.
Critical Illness
You can also opt to include critical illness in your mortgage protection insurance, which will pay you and your family a lump sum if you suffer a life changing critical illness. Depending on the policy, this can include things like cancer, strokes, deafness and MS, which will all have an impact on your ability to work and look after yourself in the future.
Things to consider:
This is not a savings policy & If you cancel your policy there is no cash-in value.
Cover will end if you don’t make monthly payments.
If your mortgage interest rate ever goes over the relevant stated interest rate provided for in your product’s key facts document, it will not always guarantee to repay the outstanding amount.
You would not have this type of policy for a pure interest only mortgage as the mortgage debt may not decrease at all. A level life insurance policy would be better. Further, you may wish to provide for your dependents and loved ones over and above the mortgage debt being repaid. In this case you could opt for alternatives. It is best to contact us to discuss and we will help you decide and provide the quotations for your consideration.